A few days ago, we saw another crude oil cargo leaving Northern Europe with destination the US Atlantic Coast. While not that significant as a singular event, it gives us the opportunity to discuss a potential rising trade in the Aframax sector. It has been our position for a while now that it is very likely to start seeing more crude cargos from Northern Europe to the US East and Gulf coast and in order to explain that, we have to start by looking at the crude balance for both regions.
With a pandemic that doesn’t seem to slow ...
HSFO on the Rise
Nov. 13, 2020
As promised on last week’s highlight, we are interested in exploring the potential scenario of high sulfur fuel oil (HSFO) pricing very close or even at par with very low sulfur fuel oil (VLSFO) in the near-term. As we had predicted, VLSFO and not MGO became the fuel of choice after the IMO 2020 regulations took effect on January 1st. Despite, or better, because of that, scrubber installation became a “hot” topic during the time leading up to the transition as shipowners wanted to take advantage of the, at the time, expected high price spread between the two ...
A Surge in Drydocking (Vol. 2)
Nov. 6, 2020
One of the main topics of the weekly highlight for the previous month is coming back in the spotlight. VLCC drydocking activity in October surpassed even our previously elevated expectation, recording the highest level (40) in recent times. This did not come as a surprise since we have already discussed how very few ships went in for drydocking during the first half of the year amid a pandemic and very high freight rates. Despite our anticipation though, the numbers we saw for October are nothing short of extraordinary.
According to the latest available data, 40 unique VLCCs have entered drydock ...
US Crude Export Scenarios - Updates
Oct. 30, 2020
Given the US is the largest crude oil producer in the world, it is worth taking a closer look at the potential scenarios that can develop for the region and its exports. We have touched on this subject a few months ago and we always like to take a fresh look and approach and data is refreshed and updated. As with other aspects of the crude markets, we like to focus on the crude balances as it has been demonstrated that they remain a main driving force of exports and imports in a region.
Looking at a high-level picture of ...
A Short Outlook on Refining
Oct. 23, 2020
The story of the interaction between oil supply and demand is, of course, closely related to the future of the refining sector. In 2019 and 2020, we saw the most significant refinery capacity expansion in the Far East and Southeast Asia regions (Figure 1). It is worth noting that contrary to the production side, refining additions are usually projects that have begun some time ago, so their completion time was not likely to be affected much by the global pandemic.
Back to the Far East and SE Asia, we have already seen the additional capacity playing its role in supporting ...